Understanding Your Credit Report and the FCRA
Know Your Rights Under the Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law that details how consumer credit information can be collected and used. Under the FCRA, consumers have a right to view the information in their credit file and to dispute inaccurate information.
As a consumer, you should be aware of your rights to avoid being taken advantage of by companies in the credit reporting industry.
FCRA Rules for Consumer Reporting Agencies
According to the FCRA, consumer reporting agencies are companies that collect credit information about consumers for the purpose of selling the information to third parties. The best-known examples of consumer reporting agencies are the three major credit bureaus: Equifax, Experian, and TransUnion.
Under the FCRA, credit bureaus and other consumer reporting agencies are required to do the following.
Provide You With a Copy of Your Credit File at Your Request
You'll have to provide personal, identifying information so the credit bureau can confirm that you're the person requesting your credit report. There are certain times that the credit bureaus have to provide you a free copy of your credit report:
- Once annually through the centralized website annualcreditreport.com
- A business has taken adverse action (denied your application or charged a higher interest rate) because of information in your credit report
- You are unemployed and planning to look for a job within the next 60 days
- You are on welfare
- You have been a victim of identity theft
- Your credit report contains inaccurate information resulting from identity theft
In response to the coronavirus pandemic, all three of the major reporting agencies are offering free weekly online reports through April 2022.
Investigate Information You Dispute
The only time the agency may not investigate is if you do not provide the bureau with enough information to investigate your dispute, you dispute everything on your credit report, or you re-dispute an item without offering additional information regarding your dispute.
Correct or Delete Information
Agencies are required to correct or delete inaccurate information within 30 days of your dispute or up to 45 days if you send additional information after submitting your written dispute.
Additionally, they should delete outdated (negative) information that is seven to 10 years old, depending on the type of information.
Limit or Grant Access to Your Information
Agencies should limit access to your file to only those businesses that have a permissible purpose for viewing your credit report.
The FCRA is specific about when businesses can access your credit report. A few of the most common cases that fall under "permissible purpose" include: To decide whether to extend credit to you, in connection with collecting a debt, for employment purposes, and to underwrite an insurance policy
They should also provide your credit report to employers only with your written consent and provide you with a copy of your credit score upon your request.
Agencies are also required to give you the opportunity to opt out of prescreened credit offers.
Requirements for Information Furnishers
The FCRA applies to more than just credit bureaus. The businesses that provide information to the credit bureaus, or information furnishers, also have legal obligations. For instance, they:
- Cannot report inaccurate information
- Must promptly update and correct any inaccurate information previously provided to the credit bureaus
- Must tell you about any negative information reported to the credit bureaus within 30 days
- Must let the credit bureaus know when you voluntarily close an account
- Must have a procedure for responding to identity theft notices sent by the credit bureaus
- Cannot report accounts that you have previously reported were the result of identity theft
You have the right to dispute inaccurate credit report information directly with the information furnisher in writing. After receiving your dispute, the creditor must notify the credit bureau of your dispute and is not allowed to continue reporting inaccurate information until it has investigated your dispute.
Businesses are not legally required to report to the credit bureaus. When they do, they must follow the rules set by the FCRA.
Requirements for Businesses Who Use Your Credit Report Information
Companies may request to see your credit report if they have a permissible purpose, for example, to grant credit to you after you've submitted an application. The FCRA requires that these businesses:
- Let you know when you've been turned down because of information in your credit report
- Provide you with the name and address of the credit bureau who supplied the report used in the decision to turn you down
Dealing With FCRA Violations
You can seek damages from a business that violates your rights under the FCRA, whether it's the credit bureau, an information furnisher, or a user of your credit report information.